Gunnar Myrdal, a Swedish economist, made an international reputation with his 1944 book, An American Dilemma, today considered a classic in sociology. The book was the end product of a study that the Carnegie Corporation had commissioned about what was then called the “Negro question.” Myrdal’s damning critique of the “separate but equal” doctrine played a large role in the Supreme Court’s 1954 ruling on Brown v. Board of Education of Topeka, which outlawed racial segregation in public schools. The book also contains solid economic reasoning. Myrdal, an egalitarian sympathetic to socialism, showed that Franklin Roosevelt’s economic policies had badly hurt blacks. Myrdal singled out two New Deal policies in particular: restrictions on agricultural output and the minimum wage.
Myrdal opened a chapter titled “New Blows to Southern Agriculture During the Thirties: Trends and Policies” with the following:
Of all the calamities that have struck the rural Negro people in the South in recent decades—soil erosion, the infiltration of white tenants into plantation areas, the ravages of the boll weevil, the southwestern shift in cotton cultivation—none has had such grave consequences, or threatens to have such lasting effect, as the combination of world agricultural trends and federal agricultural policies initiated during the thirties. (p. 254)
In an attempt to stabilize farm income, wrote Myrdal, the U.S. government restricted the production of cotton, putting hundreds of thousands of mostly black sharecroppers out of work:
It seems, therefore, that the agricultural policies, and particularly the Agricultural Adjustment program (A.A.A.), which was instituted in May, 1933, was the factor directly responsible for the drastic curtailment in number of Negro and white sharecroppers and Negro cash and share tenants. (Ibid.; italics in original)
Myrdal also described how minimum wage legislation, ostensibly to improve working conditions, actually worsened blacks’ economic standing:
During the ’thirties the danger of being a marginal worker became increased by social legislation intended to improve conditions on the labor market. The dilemma, as viewed from the Negro angle is this: on the one hand, Negroes constitute a disproportionately large number of the workers in the nation who work under imperfect safety rules, in unclean and unhealthy shops, for long hours, and for sweatshop wages; on the other hand, it has largely been the availability of such jobs which has given Negroes any employment at all. As exploitative working conditions are gradually being abolished, this, of course, must benefit Negro workers most, as they have been exploited most—but only if they are allowed to keep their employment. But it has mainly been their willingness to accept low labor standards which has been their protection. When government steps in to regulate labor conditions and to enforce minimum standards, it takes away nearly all that is left of the old labor monopoly in the “Negro jobs.”
As low wages and sub-standard labor conditions are most prevalent in the South, this danger is mainly restricted to Negro labor in that region. When the jobs are made better, the employer becomes less eager to hire Negroes, and white workers become more eager to take the jobs from the Negroes. (p. 397)
Myrdal’s analysis predated george stigler’s classic 1946 article detailing the harmful effects of the minimum wage law. It supports the view that there truly is consensus among economists of various political persuasions when ideological loyalties are laid aside and clear economic analysis is undertaken.
Myrdal’s other major classic is Asian Drama: An Inquiry into the Poverty of Nations. Its major message is that the only way to bring about rapid development in Southeast Asia is to control population, have a wider distribution of agricultural land, and invest in health care and Education.
In 1974 Myrdal and Friedrich Hayek shared the Nobel Prize in economics “for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social, and institutional phenomena.”
Besides being an economist and a sociologist, Myrdal was also a politician. He was twice elected to Sweden’s Parliament as a senator (1934–1936, 1942–1946), was minister for trade and commerce (1945–1947), and served as the executive secretary for the United Nations Economic Commission for Europe (1947–1957).
About the Author
David R. Henderson is the editor of The Concise Encyclopedia of Economics. He is also an emeritus professor of economics with the Naval Postgraduate School and a research fellow with the Hoover Institution at Stanford University. He earned his Ph.D. in economics at UCLA.